In the old fairy tale of Cinderella, when the clock strikes 12, Cinderella’s opulent carriage turns into a pumpkin and the horses drawing the carriage turn into mice. Every so often in the business world, the clock strikes 12 and past achievements or failures cease to matter. Technological change resets the starting line as business models and assets—even those having long records of generating profuse amounts of cash—turn into pumpkins and mice.

In a dynamic environment, it is powerful incumbents, as prisoners of their own devices, that are the most vulnerable even as they appear invincible. The fourth industrial revolution and 5G connectivity promise to bring such change to the global business landscape, and offer a chance for emerging economies to close the wealth gap with advanced economies much faster than anticipated.

The fourth industrial revolution can be thought of as “the fusion of technologies that is blurring the lines between the physical, digital, and biological spheres", to use a framework popularized by World Economic Forum founder Klaus Schwab. Reliance Industries, in a corporate filing explaining the Jio value proposition, compared 3G to a dripping faucet and 4G to a shower. The jump to 5G will not just bring an order of magnitude increase in data speed, but a commensurate decrease in latency. The increased responsiveness in particular enables altogether new applications, as connected devices and machines will be able to share data in real time. With the advent of 5G, technologies such as the internet of things, augmented reality, virtual reality, smart cities, drones and intelligent machines that have been tossed around for years as buzzwords, will finally be deployable for mass use.

There will be many new policy and governance puzzles. The digital revolution we have seen thus far is already straining a regulatory and legal regime designed for the industrial economy. Competition law, as drafted and practised in the US, Europe and India, does not heed Metcalfe’s law, which posits that the effect (and consequently, the value) of a network is proportional to the square of the users connected to it. Regulators made the error of viewing Facebook’s acquisitions of Instagram and WhatsApp only as linearly building capabilities in new areas, the way a cement business might diversify into steel, whereas in reality the network effect of owning and linking three social platforms endows Facebook with exponentially more power.

Accounting standards require that research and development investment be charged against earnings as an expense, rather than capitalized on the balance sheet the way industrial asset purchases are treated. This has obvious implications for a government’s tax revenue. When a service is provided free (as most digital services are), its economic contribution is not measured by conventional statistics such as gross domestic product.

In 1987, economist Robert Solow said that “you can see the computer age everywhere but in the productivity statistics". Productivity measurement methods continue to lag behind till date. Ensuring consumer data protection and privacy, which was never much of a concern earlier given the prosaic fact that no one entity could amass and process data on the scale companies like Facebook and Google do today, is now a thorny problem for policymakers across the world.

Finally, in India, exiting from investments is a major challenge for venture capital investors, as capital markets and listing regulations impose restrictions on loss-making companies. This is connected to the use of outmoded accounting standards, and the inability to correctly value intangible assets like networks and intellectual property. The barrier to going public in India closes options for entrepreneurs, incentivising both talent and start-ups to relocate offshore. Reform efforts in this area over the last few years have followed the wrong-headed and typically Indian mentality of clumsily carving out special concessions for “start-ups", rather than changing the general requirements and introducing a contemporary, liberalized framework applicable for all companies that are seeking to tap public markets, irrespective of size or sector.

The fourth industrial revolution and 5G demand a policy response to address all of the above challenges in support of India’s entrepreneurship boom. Additionally, proactive policymaking is necessary to design regulations for the deployment of drones, autonomous vehicles and other kinds of intelligent machines. Advances in healthcare will not be limited to medical devices and drugs—new avenues are emerging for preventive care with the rise of gene-editing. The changes afoot open a window of opportunity to overhaul healthcare regulation more geared to the fourth industrial revolution, where fusion of technologies will be the norm.

It is excellent to see that India has a seat at the table when 5G protocols are being finalized. Credit is due here to the Narendra Modi government’s forward-looking stance and commitment in ensuring that India’s specific needs and concerns are addressed. Where India saw the commercial deployment of 3G happen a decade late and 4G came five years late, this time India is gearing up to adopt 5G when it’s ready. This presents a once-in-a-generation economic and business opportunity.

This is the first in a two-part series.

Rajeev Mantri is executive director of venture capital firm Navam Capital and co-founder of the India Enterprise Council.

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